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Bitcoin transaction delays

For the past few weeks, there have been increased transaction delays on the Bitcoin network, something which affects all Bitcoin providers and users all around the world.

When you send Bitcoin, the transaction may be instantly broadcast to the Bitcoin network, but will not immediately be confirmed. Most wallets, like Luno, require three blockchain confirmations before it will show up as completed, some may require up to six.

Luno doesn’t have full control over the speed that transactions get confirmed on the blockchain, neither does any other single company or entity.

How does the Blockchain work?

Approximately every ten minutes, a new block is created and added to the blockchain through a process called mining. Each block verifies and records any new transactions (such as the Bitcoin you may be sending). These transactions are then confirmed by the Bitcoin network.

For example, if Jodi sends two Bitcoins to Werner, this transaction will remain “unconfirmed” until the next block is created.

Once the next block is created and the new transaction is verified and included in that block, the transaction will have one confirmation.

Approximately every ten minutes thereafter, a new block is created and the transaction is reconfirmed by the Bitcoin network.

How are delays caused?

As mentioned above, blocks are usually confirmed at approximately one block every ten minutes.

However, the Bitcoin network can currently only handle a finite amount of transactions per block. Each transaction has a certain size in bytes and each block can only contain a certain number of bytes. When a lot of transactions are being broadcasted --faster than what the network can currently process it-- it creates a backlog of unconfirmed transactions. Backlogs happen occasionally, but the network eventually resolves all of the transactions within a day or so.

Is there a faster alternative?

Bitcoin is an evolving technology and there is a healthy debate over the so-called “block size debate”, which aims to address these problems. This means that in time (and with consensus), Bitcoin transaction speeds could very well improve in future.

In the meanwhile, we have a great option for customers who are sending to another Luno wallet. If you send to the recipient’s Luno-registered email address or phone number, the transaction will happen instantly. The other advantage is that no Bitcoin network fees will apply: we’ll send the Bitcoin free of charge.

Werner van Rooyen

Werner heads up Marketing and Communications at Luno. His passions include payments, e-commerce, technology, marketing and design: something that he has been fortunate enough to do on three different continents. Werner has lived and worked in South Africa, the United States, Indonesia, Taiwan and China.

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